Wednesday, June 14, 2006, The Jakarta Post
Indonesia's Business Competition Supervisory Commission (KPPU), which last week observed what many analysts see as its sixth turbulent year of operations, has undeniably become a more effective watchdog of business competition in Indonesia. Even though it lost in courts on many of its rulings, the commission has served as an increasingly powerful deterrent against unfair business practices. Commission Chairman Sjamsul Maarif shared his reflections on the commission's performance in an interview with The Jakarta Post Vincent Lingga.
Question: Do you think the establishment of the commission six years ago has succeeded in preventing or reducing unfair business practices in Indonesia?
Answer: Prior to the enactment of the 1999 Antimonopoly Law, the Indonesian economy had been characterized by pervasive government intervention in industrial, labor, and credit markets for more than 30 years, making monopoly, unfair business practices, and anti-competition common practices in the Indonesian economy. It was these anti-competitive business activities and regulatory distortions that the KPPU dealt with in the first six years of its work.
Certainly six years is too short a time to assess whether KPPU has been effective in executing its task, given the deeply-entrenched monopolistic practices and other forms of abuse of the dominant market power in the country's economy.
How many cases has the commission issued rulings on?
One of the general objectives of the 1999 Antimonopoly Law is to promote a culture of competition in society through changes in behavior among stakeholders. Recognizing this objective, the commission does not see its achievements solely in terms of court's decisions on the commission's rulings. There are two main factors that correlate to one another. The court's decision itself as the formal decision and the behavioral changes in society and specifically in convicted business actors.
Over the past six years, the commission had dealt with 61 cases and issued 39 rulings, of which 28 declared the defendants guilty. But 15 of these defendants challenged the rulings in courts. Of these court cases, the commission won in three cases, with the rest still pending either at the district courts or Supreme Court.
Although many legal aspects of the law enforcement need to be strengthened, there has been significant progress in the domestic competition environment.
Although many legal aspects of the law enforcement need to be strengthened, there has been significant progress in the domestic competition environment.
The commission finally won its high-profile case against Pertamina and its business partners with regard to the sales of the oil company's tankers. But it seems that the Supreme Court's rulings have not been executed. What is the problem?
The Antimonopoly Law rules that the commission shall seek an order to request the decision to be enforced by the district court. The commission filed a request with the Central Jakarta District Court as soon as it received the Supreme Court's decision in early March that upheld the commission's ruling on the case of Pertamina's tanker sale. But the commission is still waiting for concrete action on the part of the court.
Why does it appear that the commission has lost in the courts on many of its rulings on high-profile cases? Is it because the commission lacks the competence to build up a strong case or is it due to the judges' lack of knowledge of complex business transactions?
Six years are obviously far from adequate to promote a culture of competition and to build the institutional capacity to enforce the competition legislation. Legal aspects, the culture of competition and government policies are only some of the important issues that need to be adjusted to the dynamics of competition. Given its novelty, all stakeholders -- businesses and law enforcers and the people in general -- are still in the early learning period.
While the commission has steadily improved its institutional capacity through its international networks, efforts to improve the knowledge of appeal judges have also been made through workshops and seminars. The concept of competition, however, is quite dynamic, requiring all law enforcers to keep updating their knowledge.
At the earlier period of implementation, many court judges did not even seem to have understood the basic concept of competition law. But now, workshops and seminars conducted to improve stakeholders understanding of competition law seem to have shown significant results.
What amendments should be made in the 1999 Antimonopoly Law in order to give the commission stronger legal teeth?
One of the main reasons for the need to amend the 1999 Antimonopoly Law is to strengthen the legal authority of the commission to enforce the competition more effectively. Some obstacles in the implementation of the law are derived from the acute lack of investigative powers in the hands of the commission.
The authority of the commission provided under the law does not include the practical authorization for the commission to conduct on-the-spot investigations or raids or to confiscate evidence. Without these powers, the commission has to rely merely on the information given by the examined parties in the investigation process.
Besides a stronger legal authority, the commission also seems to need to improve the capability of its investigators to comprehend increasingly complex business transactions. How is the commission addressing this problem?
When it comes to enforcing the law, the commission needs to ensure that all of the members of the secretariat's staff have sufficient capacity and competence to perform their tasks. Developing a good understanding of competition issues, analytical skills on competition and strategies to conduct effective investigation on anticompetitive practices is one of the commission's priorities.
Many efforts have been made to improve the capacity of the secretariat's staff mostly through training, workshops and seminars. Sharing experiences by participating in international roundtable discussions on competition policy and law has also been one of the most effective ways to learn and update the knowledge of our staff.
